Tuesday, October 04, 2016

“Hygienic wipes labeled and sold as ‘flushable’ have caused
and are continuing to cause increased costs and property damage to the
governmental entities that operate sewer systems and water treatment
facilities.” Municipalities in Minnesota and Wisconsin sued over the costs and
property damage they say they have suffered due to false advertising of “flushable”
wipes. The court allowed some of their claims to proceed.

Plaintiffs alleged that each defendant represents that its
respective wipes are “flushable.” Some, like Cottonelle, made additional claims
such as “Sewer and Septic Safe” and “break up like toilet paper after flushing.”
Defendant Tufco allegedly made “flushable” wipes for private label
customers. Plaintiffs alleged that
approximately 25% of their sewer clogs could be attributed to flushable wipes
clogging pipes. Further, they alleged
that defendants were members of the Association of Nonwoven Fabrics Industry (INDA),
a trade association that created “Guidelines for Assessing the Flushability of
Disposable Nonwoven Products.” Defendants, through their membership in INDA,
allegedly “manipulated [INDA’s] test standards and guidelines making them
weaker to guarantee [Defendants’] products could be marketed as ‘flushable’
under the INDA guidelines.”

Standing: defendants argued that plaintiffs didn’t detail
exactly how defendants caused their injuries.
It was enough for the municipalities to explicitly make allegations that
they are injured by wipes marketed as flushable, that defendants each produce
and sell these “flushable” wipes, and that it is “Defendants’ continued sale
and promotion of wipes as ‘flushable’ and ‘sewer and septic safe’ ” that has
caused and is causing Plaintiffs’ injury.” The court here distinguished Wallace
v. ConAgra Foods, Inc., 747 F.3d 1025 (8th Cir. 2014), in which plaintiffs
alleged that not all Hebrew National hot dogs were 100% kosher, as ConAgra had
advertised. The Eighth Circuit found that because plaintiffs had not alleged
that they themselves had actually purchased or consumed any defective
non-kosher hot dogs, plaintiffs had not pleaded an injury for standing
purposes. But, unlike Wallace, this wasn’t a manufacturing
defect case. The municipalities weren’t
arguing that some poorly-made subset of flushable wipes was responsible for
their injuries, but that falsely advertising an entire class of wipes as
flushable harmed them. The Wallace plaintiffs “never claimed to
have actually come into contact with the offending non-kosher hot dogs, while
Plaintiffs here have repeatedly alleged that not-actually-flushable ‘flushable’
wipes are clogging their water treatment facilities.” Defendants’ manipulation of INDA also
plausibly caused the municipalities an injury.

Nor was it fatal that clogs can be traced to numerous
different causes. “A plaintiff is not
deprived of standing merely because he or she alleges a defendant’s actions
were a contributing cause instead of the lone cause of the plaintiff’s injury.”
Article III standing is not proximate causation. Flushable wipes allegedly caused one in four
clogs, which was enough for standing.
Plus, the municipalities plausibly alleged a risk of future harm, which
couldn’t be accompanied with a perfectly detailed causal chain. The court did
find that plaintiffs couldn’t proceed with a Declaratory Judgment Act claim
because it wasn’t a real claim.

But more importantly, breach of warranty and consumer
protection claims survived. Breach of warranty: In Minnesota, “where a
third-party suffers property damage from a product, that person may constitute
a third-party beneficiary even if the party never used, purchased, or otherwise
acquired the product,” and that was properly alleged here. Defendants argued that plaintiffs’ claims
were time-barred by the four-year statute of limitations, since the wipes have
been on the market since at least 2008.
But the warranty at issue here, that the wipes are actually flushable,
“extends to future performance of the goods” – the flushing of the wipe. The cause
of action does not accrue until the date “the breach is or should have been
discovered,” which is no earlier than the date the consumer flushes the wipe
down the toilet. Thus there was no time bar “for at least a great portion of
the wipes that are allegedly clogging and will clog Plaintiffs’ sewer
systems.” Nor was there a failure to
provide pre-suit notice, as required by Minnesota law.

Express warranty: Minnesota, adopting the UCC, takes the
position that: “In actual practice, affirmations of fact made by the seller
about the goods during a bargain are regarded as part of the description of
those goods; hence no particular reliance on such statements need be shown in
order to weave them into the fabric of the agreement.” The wipes say
“flushable”; this affirmation of fact was woven into the fabric of the
agreement.

Implied warranty of merchantability: Defendants argued that
a reasonable person might think a wipe was “flushable” as long as it passed
through their toilet’s piping. But the municipalities properly alleged that
the defendants described their wipes as safe not just for toilets, but also for
wastewater treatment facilities. “A reasonable person would undoubtedly expect
that a product represented to be safe for sewer systems actually be safe for
sewer systems – not just for the consumer’s own piping.” However, the court dismissed claims based on
the implied warranty of fitness for a particular purpose.

Minnesota consumer protection statutes: the municipalities
weren’t purchasers, but the state law doesn’t require them to be. Grp. Health Plan, Inc. v. Phillip Morris Inc.,
621 N.W.2d 2 (Minn. 2001) (“[T]o state a claim that any of the substantive
[consumer protection] statutes has been violated, the plaintiff need only plead
that the defendant engaged in conduct prohibited by the statutes and that the
plaintiff was damaged thereby.”) Nor did
Minnesota’s deceptive trade practices statute require competition between the
parties. Lexmark was persuasive, but not state law, “and cannot overcome the
text of Minnesota’s statute: Plaintiffs ‘need not prove competition’ in Minnesota.
Minn. Stat. § 325D.44, subd. 2.”

The Wisconsin Tort Reform Act didn’t defeat these claims
either. The legislature was trying to
bar plaintiffs from recovering “even when a plaintiff could identify only a
class of products, made and sold by a class of companies, as the source of the
plaintiff’s injury.” The plaintiff in a product liability case must therefore “prove
that the defendant is associated with ‘the specific product alleged to have
caused the claimant’s injury or harm.’” There were no cases interpreting the statute.

Nonetheless, the court declined to dismiss most of the
claims. First, the Tort Reform Act was a burden of proof rule, not a pleading
rule. Under Twiqbal, plaintiffs’ complaint satisfied the Act’s requirements;
they alleged injury by the specific wipes produced by these defendants. The
municipalities also alleged that they could determine which wipes were in which
particular plaintiff’s wastewater treatment facilities. “[I]t is a close
question whether it is plausible that each and every specific product is
causing each and every plaintiff harm – but when examined on a product by
product basis, it is plausible that each product has been sold to customers in
the vicinity of Plaintiffs’ sewer systems and has entered their piping and caused
them the harm that they allege to have taken place.”

Plaintiffs also pled a public nuisance claim. In Wisconsin, a public nuisance is “a
condition or activity which substantially or unduly interferes with the use of
a public place or with the activities of an entire community.” The allegations
that defendants’ products were drastically increasing the cost of water
treatment facilities, and that these facilities were used to clean the water
for the public health, were sufficient. Defendants’ main argument was that they
weren’t responsible for the literal clogs, but rather the allegedly inadequate
or false warnings that indirectly led to the clogs. But Wisconsin didn’t require direct
causation, only that the defendant (1) had “either actual or constructive”
notice of the alleged public nuisance, and (2) failed to “abate” the public
nuisance causing the plaintiff’s injury. Representing that wipes were flushable could
be a covered nuisance “activity.”

Tufco brought a separate motion to dismiss. Because it makes
wipes for private label customers and is “apparently not a consumer-facing
company,” tracking Tufco’s responsibility was more difficult. Still, plaintiffs
did allege that Tufco “clearly advertises ‘flushable’ wipes for its consumers”
on its website, and it was more than plausible to suggest that this claim
mattered to private label customers.
However, for Wisconsin claims, the Tort Reform Act required more. Plaintiffs needed to allege that Tufco made
wipes for a specific company, and that those wipes caused them harm.

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